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Monthly Archives: May 2017
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HHS delays 340B drug program regulations: 4 things to know
HHS on Thursday delayed a regulation preventing drug companies from overcharging hospitals under the 340B drug discount program.
Here are four things to know.
1. The 340B drug pricing program, enacted in 1992, ensures hospitals treating a large proportion of low-income patients can buy drugs from manufacturers at a discount of 20 to 50 percent, according to the report. About one-third of U.S. hospitals — or 2,000 — participate in the program, purchasing about $12 billion in discounted drugs in 2015, reports The Washington Post.
2. In 2010, Congress instructed HHS to implement program regulations to set price ceilings fordrugs and establish civil monetary penalties on manufacturers that “knowingly and intentionally overcharge 340B covered entities,” according to a statement from HHS. The agency in January issued a final rule for the regulations to take effect March 6.
3. After President Donald Trump initiated a hiring freeze on all federal agencies in early March, HHS pushed back the rule until May 22. The agency also requested comments over a proposal to further delay implementation of the regulations until October. After reviewing the comments, HHS decided to officially push back the regulations to take effect Oct. 1.
4. 340B Health, a lobby group representing hospitals and health systems in the 340B program, shared an emailed statement with Becker’s, saying it was “disappointed with HHS’ decision to further delay … a long-overdue regulation to police the pharmaceutical industry.”
The health system CEO’s affiliation playbook — 5 thoughts from a CEO who has executed 50+ agreements
As hospitals and health systems seek ways to fortify their organizational strategies amid the transition to value-based care, the drive to forge new partnerships will continue. Although analysts forecast the consolidation trend will carry on, strategic organizations are increasingly realizing the value of establishing other relationships, such as affiliations and joint ventures.
The local forces at play in a given region are a significant determinant of an organization’s need to merge with, acquire or be acquired by another hospital or health system. And while transactional deals will always be necessary, ongoing financial pressures stemming from the transition to value-based reimbursement and the overall emphasis on population health management have prompted health care leaders to partner with their likeminded peers to deliver better, more cost-effective care.
The key is figuring out where your organization can do a better job working with a partner than alone, and more importantly, who to collaborate with.
In some cases, this has led to the union of unlikely bedfellows — organizations that were formerly competitors are, in some cases, coming together to pursue a joint goal. In other cases, hospitals and health systems may benefit from establishing partnerships with pharmaceutical companies, medical device makers, retail clinics or even non-healthcare entities. For example, Northwell Health has worked with The Ritz-Carlton and Tiffany & Co. as part of our efforts to improve the patient experience and our operational processes.
As with all relationships, the most positive and high functioning are symbiotic; both partners must satisfy and complement the other. They must also — at the most basic level — get along. Here are five more ideas on successful partnerships, affiliations and joint ventures.
1. Know what you need and what you can offer. Partnerships create opportunities to expand into new markets and broaden your reach. But when it comes to selecting a partner, it’s important to clarify what it is they have that you want — and visa versa.
For example, we have a strategic affiliation with Cold Spring Harbor (N.Y.) Laboratory, a premier cancer research facility on Long Island. They have an international reputation, with several Nobel laureates in their ranks. We needed to strengthen our cancer research, and they needed a clinical partner that would allow them to connect with patients. We entered into a long-term partnership in 2015. Even though we’re very different organizations, we both benefit from the relationship.
2. Don’t overemphasize the short-term benefits. Focus as much on the short-term benefits of a partnership or affiliation as you do on your goals for five or 10 years down the line. Most relationships hit a rough patch in the beginning, but if you give up on the partnership because your troubles are making you doubt the viability of your short-term goals, you’re being too impetuous. In other words, success takes time. Take steps to solve short-term complications, but hang in there and try to make it work.
3. Be open to new partners. Keep an open mind when it comes to discussing new relationships with different partners — even those that don’t seem to make much sense in the beginning. The rapid pace of change in healthcare and our collective pursuit of innovation oblige us to at least listen to others’ ideas and consider new possibilities.
4. Don’t get stuck in an abusive relationship. New partners might hit a rough patch or need to adjust their communication style to meet one another’s needs, but it is also important to know when it’s better to cut your losses and call it quits. If a relationship becomes abusive or dysfunctional and there is no longer any benefit for being involved, then it’s time to re-evaluate the situation.
5. Determine whether you’re truly compatible with a potential partner. If your organization is looking for a long-term partner — not just a fling — the two entities must mesh culturally. When considering a potential partner, ask yourself if there is mutual respect on both sides. Do those who are in charge of communication and collaboration work well together? Is the relationship riddled with conflicts or is it smooth sailing? Keep in mind, however, that conflicts are not necessarily a symptom of an impending breakup. Sometimes the issue can be resolved by changing the people or metrics at hand.
Most importantly, there must be ongoing and open communication. Two partners can disagree, but in most cases they can work it out.
Steward Health Care to acquire IASIS Healthcare
Boston-based Steward Health Care has signed a definitive agreement to acquire Franklin, Tenn.-based IASIS Healthcare.
The Wall Street Journal reported the transaction is for $1.9 billion. Becker’s has reached out to Steward to verify the value of the deal and the article will be updated accordingly.
Under the deal, Steward will become the largest private for-profit hospital operator in the U.S. with 36 hospitals across 10 states, managed care operations in Arizona, Utah and Massachusetts and projected revenues of nearly $8 billion in 2018, the first year of consolidated operations. The transaction, which is subject to regulatory approvals and customary closing conditions, is expected to close in the third calendar quarter of 2017, according to a news release on Steward’s website.
Currently, Steward operates 18 hospitals and directly employs more than 1,300 multispecialty physicians in facilities across Massachusetts, Ohio, Florida and Pennsylvania. IASIS operates 17 hospitals and one behavioral health hospital across Utah, Arizona, Colorado, Texas, Arkansas and Louisiana.
The deal will transfer operations of IASIS Healthcare’s 18 hospitals, which encompass nearly 7,500 patient beds and approximately 38,000 employees — including more than 1,800 directly employed multispecialty physicians and several thousands aligned physicians — to Steward Health Care. Steward will also assume operations of IASIS’ 140 outpatient facilities across Arizona, Arkansas, Colorado, Louisiana, Texas and Utah, according to The Wall Street Journal.
Steward Health Care is backed by private-equity firm Ceberus Capital Management LP and real estate investment trust Medical Properties Trust. Under the deal, Medical Properties Trust has agreed to acquire the interests of substantially all of IASIS’ hospital real estate subject to long-term leases and loans with Steward, according to the news release from Steward. The terms of the agreement specify that cash proceeds paid by MPT and other financing sources will be used to retire IASIS’ senior secured term loans and unsecured notes. Remaining cash proceeds will be paid to IASIS equity holders, including its majority stockholder, TPG Capital.
This deal marks the latest in a series of acquisitions for Steward, which in May closed a deal to acquire eight hospitals from Franklin, Tenn.-based Community Health Systems.
Rising Insulin Prices Have Diabetics Crying Foul
http://www.cbsnews.com/news/insulin-prices-rise-yet-again-causing-diabetics-to-cry-foul/
Insulin prices are only getting more painful.
Drugmakers Eli Lilly (LLY) and Novo Nordisk recently boosted their insulin list prices by almost 8 percent each, adding to concerns that treating diabetes is unaffordable for some patients. The average price of insulin almost tripled between 2002 and 2013, according to the American Diabetes Association (ADA). Even before the most recent price hike, some diabetics were cutting back or even going without the drug because of its expense.
The price hikes come at a sensitive time for the drugmakers as Eli Lilly, Novo Nordisk and rival Sanofi-Aventis are facing a class-action lawsuit alleging they conspired to raise their prices in lockstep. Almost one in 10 Americans has diabetes, a group of conditions where the body fails to properly regulate blood sugar. People with Type 1 diabetes, often referred to as juvenile diabetes, need to take insulin daily to stay alive.
“We were really disappointed in this announcement,” said Dr. William Cefalu, the chief scientific, medical and mission officer for the ADA, who noted that his organization has partnerships for research with the drugmakers. “This is really going in the wrong direction.”
Lobby groups to watch in Senate healthcare fight
Lobbying groups opposed to the House’s healthcare reform bill are pinning their hopes on the Senate for big changes.
Industry groups felt largely cut out of the House’s drafting and passage of the American Health Care Act and now are clamoring for action to fix what they view as serious defects in the legislation.
Major hospital and doctor associations, for example, want people with health insurance to stay covered and are pushing to ensure adequate funding for the Medicaid program.
Characterizing this wish list, one healthcare lobbyist put it simply: “Coverage, coverage, coverage.”
AARP, meanwhile, is urging the Senate to start from scratch on a new healthcare bill. The powerful lobbying group for senior citizens believes the legislation, in its current form, creates “an unaffordable age tax” for older Americans.
Here are the industries and groups to watch as senators write their healthcare reform bill.
Hospitals
Just a day after the House released its bill, the American Hospital Association (AHA) sent a letter to lawmakers in opposition — and that position hasn’t changed.
In a statement after the bill’s passage through the House, AHA President and CEO Rick Pollack said he was “disappointed” because the bill “jeopardize[s] coverage for millions of Americans” and “makes deep cuts to Medicaid.”
The association’s voice carries weight, as it represents nearly 5,000 member hospitals and healthcare systems and is the sixth-highest spender on lobbying this year, according to OpenSecrets.
About 24 million people would become uninsured under the House bill, according to the nonpartisan Congressional Budget Office (CBO). An updated score from the CBO is expected next week.
Other hospital organizations have also panned the House’s healthcare bill, including the Federation of American Hospitals and America’s Essential Hospitals.
Hospital associations want a bill that won’t result in millions more without health coverage and are looking to prevent the CBO-estimated $880 billion in Medicaid cuts. They say the proposed reductions will make it more difficult for hospitals to deliver care.
One hospital advocate said its group is having serious conversations on the policy recommendations it can make to the Senate to help protect patients and hospitals from the costs that could fall on their shoulders.
Healthcare providers
The fourth-largest lobbying spender this year, the American Medical Association (AMA), is also a vocal critic of the House bill.
On Monday, the group representing physicians and medical students sent a letter to Senate Majority Leader Mitch McConnell (R-Ky.) and Senate Minority Leader Charles Schumer (D-N.Y.) to “reaffirm the principles” that they say should guide any bill that changes ObamaCare.
Health coverage is a top priority for the group.
“Throughout the current debate we have consistently recommended that any proposals to replace portions of the current law should pay special attention to ensure that individuals currently covered do not lose access to affordable, quality health insurance coverage,” AMA CEO James Madara wrote in the letter.
The group is pushing to retain protections for pre-existing conditions and ensure states that expanded Medicaid under ObamaCare isn’t put at risk.
The AMA also says the new tax credits in the Republican bill for purchasing insurance should factor in income, geography and age. The House-passed bill only factored in age for determining a credit, increasing the size of the subsidy as a person gets older.
The American College of Surgeons, consisting of more than 80,000 members, didn’t formally oppose the House bill. Yet it had concerns about the bill’s access to surgical care and ability to let states opt out of requiring insurers to cover a list of 10 categories of services.
“Making sure that patients have insurance that is needed to making sure that they have timely access to surgical care was important, and I know will continue to be important to the American College of Surgeons as we review a Senate bill,” Christian Shalgian, the director of the group’s division of advocacy and health policy, said.
He added: “I think we’re definitely getting a receptive ear from the Senate. They’re interested in where we’re at with what they’re going to be doing in the coming weeks and months.”
Insurers
The leading lobbying group for health insurers, America’s Health Insurance Plans (AHIP), didn’t oppose the House bill.
But it did see room for improvement — and was quick to provide recommendations to the Senate.
Just two hours after the House passed its bill, Marilyn Tavenner, AHIP president and CEO, detailed a few proposed changes in a statement. They included bolstering tax credits for lower-income Americans, older adults and those living in areas with high healthcare costs and providing enough time for people to adjust to Medicaid changes, among others.
Insurers also have an immediate request, though: getting certainty from the administration and Congress that crucial ObamaCare payments to insurers, to the tune of about $7 billion, will continue to be made.
The Association for Community Affiliated Plans (ACAP) did come out against the bill. ACAP represents 60 nonprofit safety net plans serving those enrolled in public health programs, such as Medicaid and the children’s health insurance program.
ACAP CEO Margaret Murray said the House’s bill, if enacted, “would cause considerable damage to our health care system.” Areas of concern included Medicaid cuts and phasing out the enhanced federal funding to states that expanded the health program for the poor and disabled.
“[The bill] will severely limit access to services for the more than 70 million people who rely on Medicaid for effective health coverage — and locks states’ funding to what they spent on Medicaid in 2016,” Murray said in a statement an hour before the bill passed.
AARP
AARP says the bill has an “age tax.”
The group, which represents nearly 38 million people, opposes a provision in the House bill that would let insurance companies charge older adults five times more than younger people.
This is a change from ObamaCare, which operates under a 3-to-1 ratio — a ratio that AARP would like to keep, said David Certner, AARP’s legislative counsel. “Already at 3-to-1, it’s quite expensive,” he said.
AARP is concerned that the change to the age ratio, coupled with reduced financial assistance, will result in premiums older adults can’t afford. The CBO estimated a 64-year-old making $26,500 a year would have to pay more than half of their income in premiums under the American Health Care Act.
“AARP urges you to ‘start from scratch’ and craft health care legislation that ensures robust insurance market protections, controls costs, improves quality, and provides affordable coverage to all Americans,” AARP Executive Vice President Nancy LeaMond wrote in a letter sent to senators Monday.
HENRY KOTULA 